Besides, the IT company will put in place and manage data centres for the payments bank in order to ensure smooth functioning of the new business. The contract is for one year. All customer-facing applications and fraud-detection and analytics systems will be built by Paytm in house.

Paytm, a digital wallet and ecommerce company, received the central bank’s in-principle approval to set up a payments bank in August last year.

Payments banks can accept deposits from individuals and small businesses for up to Rs 1 lakh an account. But they cannot lend. They can also sell mutual funds, insurance and pension products as well as facilitate payments and remittances with a focus on the unbanked segment like migrant workers. Paytm plans to launch its payments bank in August.

“Technology is an integral part of the value proposition we seek to create for customers of our upcoming bank,” said Shinjini Kumar, the newly appointed chief executive of Paytm’s payments bank business.